By Byron MacLeod, CFA
Associate Director of Research, Gradient Analytics, LLC

“Whatever you are, be a good one.” – Abraham Lincoln

We at Gradient Analytics are accounting experts. We evaluate companies for earnings sustainability, financial engineering, and accounting mismanagement. Unfortunately, many investors and portfolio managers may be unaware of the variety of levers enabling managers to aggressively recognize revenue, temporarily boost earnings, overstate assets, hide liabilities, or grow through acquisitions. Unaware investors can suddenly find that their supposedly “safe” investments have turned sour on them.

By monitoring the true quality of earnings, it becomes easier to judge a company’s true financial health.

The “Trump Bump” & Rising Correlations

Though the market appears to be recently dominated by Trump’s potential impact on the American economy, earnings quality trends continue to be relevant to stock prices.    Read more Read more about The Trump Bump: An Earnings Quality Analysis

byron / Tag: Donald Trump, IYZ, IYF, IEO, ITA, STI, CMA, QCOM, NRP, FMC, DGI, SPX / 0 Comments

Even with many of the global issues pushed off the front page, eager bulls found yet another reason to keep the troops in the barracks. The only newsworthy items are related to corporate earnings reports, which have been mixed at best, interspersed with the occasional spectacular report -- primarily from mega-caps like Google (GOOGL), Facebook (FB), or Amazon (AMZN). Some of the bulls have taken their chips off the table until after Labor Day, while others have merely scaled back to scalping some trades. Either way, stocks appear destined to thrash about for the rest of the summer. Read more about Sector Detector: Lackluster earnings reports put eager bulls back into waiting mode

Despite a highly eventful week in the news, not much has changed from a stock market perspective. No doubt, investors have grown immune to the daily reports of geopolitical turmoil, including Ukraine vs. Russia for control of the eastern regions, Japan’s dispute with China over territorial waters, Sunni vs. Shiite for control of Iraq, Christians being driven out by Islamists, and other religious conflicts in places like Nigeria and Central African Republic. Read more about Sector Detector: Bulls remain unfazed by borderline Black Swans

U.S. stocks just continue to cruise right along, although investors seem to be displaying a healthy level of caution, looking over their shoulders as they whistle past the graveyard and bet on ongoing improvement in corporate earnings and economic growth. Despite extremely overbought technical conditions and regional hot spots that may ultimately threaten global economic recovery, investors seem undeterred. Read more about Sector Detector: Stocks cruise right along, whistling past the graveyard

The market surprised us this morning with a strong performance. It could be supported by confidence in Housing, as existing sales were better-than-expected and downright positive (stay tuned for more numbers from housing sector tomorrow). Or it could be a technical move off of support at 1343 for S&P 500, which would be nice if the market recognized at healthy 10% sell-off and is now moving forward. Read more about What the Market Wants: A $64 Trillion Dilemma

david / Tag: DAL, TXT, STI / 0 Comments

I can’t light, no more of your darkness
All my pictures seem to fade to black and white
I’m growing tired and time stands still before me
Frozen here on the ladder of my life

Too late to save myself from falling
I took a chance and changed your way of life
But you misread the meaning when I met you
Closed the door and left me blind, by the light Read more about Dark Horse Traders' Hedge: Don’t Let the Sun (Trust) Profits go Down – Part II

sbrown / Tag: STI / 0 Comments

Obsessive, Compulsive

Suffocates your mind

Confusion, delusions

Kill your dreams in time

You ask me how I took the pain

Crawled up from my lowest low

Step by step and day by day

‘Til there’s one last breathe to go

Live to win ‘til you die Read more about Live to Win With These 3 Buy/Writes Reviews

sbrown / Tag: JBL, LCC, LDK, RAIL, STI, USG / 0 Comments

The Dark Horse Hedge is a new portfolio being built by Scott Brown of Sabient and Ilene at Phil's Stock World.  We started the DHH newsletter on June 30, and have been adding long and short positions over the past two weeks.  Click here to read more about DHH and our thoughts on the market, and to follow along as we add new stocks to our growing portfolio of long and short positions. Read more about THE DARK HORSE HEDGE 7-18-10

ilene / Tag: Dark Horse Hedge, Phil's Stock World, Sabrient, STI, TEX, USG, WDC / 0 Comments